Expropriation of foreign direct investments: sectoral patterns from 1993 to 2006

This paper documents expropriation of foreign direct investment (FDI) across all developing countries for the 1993–2006 period, extending data constructed for earlier decades. This unique data set on worldwide expropriation between 1960 and 2006 is used to highlight several (interrelated) stylized facts. First, although expropriations have become less frequent compared to the 1970s, the number of takings has risen since the mid-1990s. Second, foreign firms are more vulnerable to expropriation in resource-based sectors, particularly in mining and petroleum. Third, the timing of expropriation coincides with fluctuations in mineral output price levels. Finally, when newly constructed FDI stock estimates are used to compare the sectoral distribution of FDI of recent expropriating countries to that of non-expropriating countries, average resource-based FDI shares are higher in expropriating countries; however, this difference is not reflected in higher value added shares for the expropriating group. This last fact is puzzling given that natural resource-based FDI has traditionally been considered high risk.     

Avoiding the Pitfalls of Net Uniformity: Zero Rating and Nondiscrimination

The current debate over network neutrality has not fully appreciated how service differentiation can benefit consumers and promote Internet adoption. On the demand-side, service differentiation addresses the primary obstacle to adoption, which is the lack of perceived need for Internet service, and reflects the growing heterogeneity of consumer demand. On the supply-side, monopolistic competition has long underscored how product differentiation can create stable equilibria with multiple providers—notwithstanding the presence of unexhausted economies of scale—by allowing competitors to target subsegments of the overall market that place a higher value on particular services. Conversely, prohibiting service differentiation would restrict competition to price and network size, which are factors that favor the largest players. These dynamics are well illustrated by global enforcement patterns with respect to a practice known as “zero rating”, which permits subscribers to access certain content without having that traffic count against their data caps. Of the six countries that have brought enforcement actions against zero rating, only India has categorically banned the practice. The other five countries (the United States, Chile, Canada, Slovenia, and The Netherlands) have adopted a more nuanced approach. A case-by-case approach is consistent with the empirical literature on vertical integration and restraints and the well-established principles for determining when to impose per se illegality and when to apply the “rule of reason”. The U.S. Supreme Court’s antitrust jurisprudence also helps identify factors that militate against liability, such as the lack of market power, nonexclusivity, and nonproprietary services.     

Reading Brand Africa Geopolitically: Nation Branding,Subaltern Geopolitics and the Persistence of Politics

In 2010, the ‘Brand Africa’ initiative was launched with the mission to transform perceptions of Africa from a continent of calamities into one of promising economic prospects and entrepreneurial populations. This transformation, ‘Brand Africa’ claims, is one where Africans take their representation from the hands of foreigners and make, through a new image, their own (hi)story. In this respect Brand Africa can be interpreted as a form of subaltern geopolitics seeking to subvert dominant geopolitical knowledge and to fight established structures of domination. However, the article argues its subversive elements are limited, especially when compared to the historical discourses of decolonial pan-Africanism upon which it draws for legitimacy. Indeed, while appropriating this legacy Brand Africa offers up a very different geopolitical vision of possible/desirable African futures. It is argued that this may be accounted for by understanding the extent to which the Brand Africa initiative appears embedded within a South African national context and its own geopolitical ambitions evident within its own nation branding project. What this highlights in turn is that the emancipatory potential and assumed synergies between national and supranational branding central to the Brand Africa initiative are not as unproblematic or uncontested as claimed.     

Return home and start new businesses: internal migration in China

Internal migration patterns in China are characterised by rapid urbanisation and cross‐regional movement and more recently by the return of migrants to their native counties. This study investigates the drivers of migrants' permanent return and their likelihood of starting new businesses in their counties of origin. The results suggest that migrants are discouraged from permanent resettlement in urban areas because of family ties and the aspiration to start businesses in their villages of origin. The study also provides evidence that the probability of starting a business upon return is affected by the migrants' accumulation of work experience, business experience, the savings earned while away, financial stability, and the social capital they have in their home counties. The results provide important insights for emerging countries in overcoming rapid urbanisation and imbalanced regional economic growth.     

The Paradox of Openness: How Product and Patenting Experience Affect R&D Sourcing in China?

External R&D sourcing may help firms compete in an environment characterized by rapid technological changes. Yet, prior studies have produced conflicting findings on how a firm's technological experience affects the extent to which the firm engages in external R&D sourcing. Although many highlight that firms with extensive technological experience are equipped with more technological knowledge, collaborative skills, and absorptive capacity, encouraging greater levels of external R&D, others suggest the opposite due to potential exchange hazards and partnership conflicts. Adopting an external partner's perspective, the current study reconsiders this “paradox of openness” by analyzing how a focal firm's product experience and patenting experience affect an external partner's tendency to provide external R&D services to the focal firm. Specifically, this study explore how a focal firm's knowledge protectiveness and tacitness embedded in its product and patenting experience influences the external partners' motivation for knowledge transfer. This study predicts that a firm's product experience increases the focal firm's external R&D sourcing because it provides high levels of knowledge tacitness and external openness and can encourage external partners to share and exchange knowledge with the focal firm. In contrast, a firm's patenting experience decreases the focal firm's external R&D sourcing because it denotes knowledge explicitness and protectiveness and may discourage external partners to share and exchange knowledge with the focal firm. This study further predicts that patenting experience has a negative moderating effect on the relationship between product experience and external R&D sourcing. Using a data set of 575 high‐tech firms in China, this study finds support for our predictions. Our findings contribute to the growing literature on the knowledge‐based view and technology entrepreneurship in emerging markets.     

PUBLIC GOODS AND THE DISSOLUTION OF STATES

We present a simple model of the dissolution of states. We combine elements of the literature on the break‐up and integration of states based on models in the fiscal federalism tradition, with elements of the literature that explains the determination of a state's political institutions as a means to credibly promise redistributions in the face of costly, perhaps violent, redistributive conflict. We are able to characterize when the equilibrium involves the dissolution of a country, and when it involves continued unity. We are also able to explore some aspects of the linkages between political institutions and the determination of national boundaries.     

Repeated Experimentation to Learn About a Flow-Pollutant Threshold

We examine in discrete time the management of a flow pollutant that causes damage when it crosses a fixed but unknown threshold. The manager sequentially chooses a pollution level that allows learning about the threshold, thereby improving future decisions. If crossed, damage can be reversed at some cost. We analyze the conditions under which experimentation is optimal, and explore how experimentation depends on restoration costs, information about the threshold, and the discount rate. Our results suggest that the level of experimentation, defined as the difference between the optimal activity with and without learning, is non-monotonic in costs and decreasing in the discount rate. We identify two stopping boundaries for the experiment, depending on cost levels compared to the lower bound of the threshold’s interval. We show that when costs are high the stopping boundary under an infinite number of decisions is the same as when there are only two decision moments. A computational extension to more than two decisions suggests that an optimal sequence of experiments can cross the same threshold several times before experimentation ceases. These results shed light on a large class of environmental decision problems that has not been examined in the literature.